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Cato Sales and Trading v. Cosmo Specialty Fibers, Inc.

United States District Court, Western District of Washington, Tacoma

May 28, 2015

CATO SALES AND TRADING, Plaintiff,
v.
COSMO SPECIALTY FIBERS, INC., Defendant.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Plaintiff Cato Sales and Trading’s (“Cato”) motion for partial summary judgment (Dkt. 15) and Defendant Cosmo Specialty Fibers, Inc.’s (“Cosmo”) cross motion for partial summary judgment (Dkt. 19). The Court has considered the pleadings filed in support of and in opposition to the motions and the remainder of the file and hereby grants in part and denies in part Cato’s motion and grants Cosmo’s motion for the reasons stated herein.

I. PROCEDURAL HISTORY

On July 9, 2014, Cato filed a complaint against Cosmo alleging breach of contract, breach of the covenant of good faith and fair dealing, and a violation of the Washington sales representative contract agreement statute, RCW 49.48.160. Dkt. 1.

On March 19, 2015, Cato filed a motion for summary judgment. Dkt. 15. On April 6, 2015, Cosmo responded and filed a cross motion for summary judgment. Dkt. 19. On April 10, 2015, Cato replied. Dkt. 27. On April 27, Cato responded to Cosmo’s motion. Dkt. 24. On May 1, 2015, Cosmo replied (Dkt. 27), and on May 4, 2015, Cosmo filed a corrected version of the reply (Dkt. 28). On May 6, 2015, Cato filed a surreply requesting that the Court strike new arguments Cosmo included in its reply brief. Dkt. 29.[1]

II. FACTUAL BACKGROUND

Cato’s parent company Charlestown Investments (“Charlestown”) identified a business opportunity to acquire and restart the former Weyerhaeuser dissolving wood pulp mill in Cosmopolis, Washington. Charlestown met with the Gores Group, a Los Angeles private equity group (“Gores”), and presented its plan to acquire the mill. In September of 2010 Gores formed Cosmo to purchase and run the mill, and Charlestown formed Cato to serve as the mill’s global sales agent.

On September 16, 2010, Cato and Cosmo entered into an agreement wherein Cosmo was the “Company” and Cato was the “Agent.” Dkt. 18, Exh. A (“Agency Agreement”). The relevant provisions of the Agency Agreement are set forth in the discussion section, but the parties essentially agreed that Cato would be the exclusive agent to pursue and obtain sales of Cosmo’s products.

It is undisputed that one of the most valuable products Cosmo endeavored to produce was high-value acetate, which is the material used to make cigarette filters. Id., Exh. E. In order to sell its acetate for cigarette filters, however, the mill must be qualified by the cigarette manufacturer. Id. The mill obtains this qualification by making samples of acetate pulp that are sent to specialty chemical companies who supply product to the cigarette manufacturers. Id. The specialty chemical companies turn the acetate pulp into acetate filter tow for the cigarette manufacturer to make into cigarette filters. Id. The cigarette manufacturer then conducts a “taste test” of the filters made from the mill’s sample.

In July 2011, Cosmo generated acetate samples for submission to two specialty chemical companies, Daicel Chemical Industries Ltd. (“Daicel”) and Eastman Chemical Company (“Eastman) who supply filter tow to cigarette manufacturers Philip Morris International Inc. (“Philip Morris”), Japan Tobacco International (“JT”), and British American Tobacco Company (“BAT”). Although the Cosmo tow passed JT and BAT’s taste tests, the tow ultimately failed Phillip Morris’s taste test. On November 19, 2012, Daicel advised Cato that the taste failure would preclude sales for 2013. Id., Exh. G.

In a letter dated May 21, 2013, Cosmo sent Cato a notice that purported to terminate Cato’s position as the Cosmopolis mill’s global sales agent effective June 3, 2013. Id., Exh. I. In letters dated the following day, Cosmo sent Cato’s customers notice of the termination and its replacement with Central National-Gottesman, Inc. (“CNG”). See, e.g., Id., Ex. J. On June 3, Cosmo issued a press release announcing that Cosmo’s new sales agent would be CNG.

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment is proper only if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party is entitled to judgment as a matter of law when the nonmoving party fails to make a sufficient showing on an essential element of a claim in the case on which the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). There is no genuine issue of fact for trial where the record, taken as a whole, could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must present specific, significant probative evidence, not simply “some metaphysical doubt”). See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists if there is sufficient evidence supporting ...


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